2021 (2) TMI 374 - HC - VAT / Sales Tax

Violation of principles of natural justice - no personal hearing was granted after the evidence and documents were filed by the appellant/writ petitioner pursuant to the notices issued by the respondent proposing to revise the assessment - Section 27 of the TNVAT Act - HELD THAT - The Hon'ble Division Bench in SRC Projects Private Limited vs. Commissioner of Commercial Taxes, Chennai Anr. 2008 (9) TMI 914 - MADRAS HIGH COURT , has considered as to why opportunity of personal hearing is to be afforded - Therefore, opportunity of personal hearing especially, in matters relating to taxation is a very effective tool where the dealer and the Assessing Officer have an opportunity to interact and certain facts will emerge during the interaction, which may not be apparent on print. That apart, we have also noted that the current situation is not very conducive both for the appellant as well as the state exchequer and the appellant has also claimed for refund, which according to them, they are rightfully entitled. This Court deems it appropriate to modify the ultimate conclusion arrived at by the learned Single Bench by directing an opportunity to be granted to the appellant, which shall be subject to certain conditions. The writ appeals are allowed and the ultimate conclusion arrived at by the learned Single Bench for dismissing the writ petitions is set aside and the appellant is directed to remit 15% of the disputed tax for each of the assessment years on or before 29.03.2021. If the appellant complies with the said condition within 7 days there from, the appellant shall file their objections by treating the impugned assessment orders dated 25.02.2019 as show cause notices, file the documents which they propose to rely upon. The Assessing Officer upon going through the same and familiarizing himself with the subject, shall afford an opportunity of personal hearing to the authorized representative of the appellant, hear the appellant in full and pass a speaking order on merits and in accordance with law.

Summary

Issues:
Challenging assessment orders under the TNVAT Act for multiple years, violation of principles of natural justice, dismissal of writ petitions due to alternate remedy invocation, jurisdiction under Article 226, opportunity of personal hearing, modification of ultimate conclusion, refund claim processing.

Analysis:

1. Challenging Assessment Orders: The appellant filed writ petitions challenging assessment orders under the TNVAT Act for the years 2009-10 to 2015-16, primarily alleging a serious violation of natural justice principles. The appellant disputed the computation of taxable turnover and claimed a refund on input tax credit.

2. Dismissal of Writ Petitions: The Single Bench dismissed the writ petitions citing the appellant's invocation of the alternate remedy of filing a statutory appeal before the Appellate Authority under Section 51 of the Act. The rule of alternate remedy was emphasized as discretionary but crucial in tax-related matters.

3. Violation of Principles of Natural Justice: The appellant contended a lack of personal hearing despite filing objections and documents, crucial for a fair assessment process. The Division Bench noted the importance of personal hearings, especially in tax matters, for effective communication and understanding between the dealer and the Assessing Officer.

4. Jurisdiction under Article 226: The Single Bench's decision on the rule of alternate remedy was analyzed in light of Supreme Court and High Court precedents, emphasizing exceptions where a writ petition can be entertained despite the availability of statutory remedies, particularly in cases of fundamental rights violations or jurisdictional issues.

5. Opportunity of Personal Hearing: The Division Bench stressed the significance of providing an opportunity of personal hearing before passing adverse orders, highlighting the need for effective communication and interaction between the parties involved in tax assessments.

6. Modification of Ultimate Conclusion: Despite agreeing with the legal aspects raised by the Single Bench, the Division Bench modified the conclusion to grant the appellant an opportunity for personal hearing, subject to conditions, to ensure a fair assessment process.

7. Refund Claim Processing: The appellant's pending refund claim was addressed separately from the assessment proceedings, emphasizing the need for authorities to consider and decide on such claims promptly, independent of assessment matters.

In conclusion, the High Court allowed the writ appeals, set aside the dismissal of writ petitions, directed the appellant to comply with certain conditions, and instructed authorities to expedite the processing of the pending refund claim.